Can You Survive on Minimum Wage?

Salon.com recently ran a short piece considering whether it is realistic to expect Americans to get by on a national minimum wage that currently sits at $8.25/ hr or lower. The piece particularly focuses on McDonalds as they recently released an online guide to instruct its low-wage employees on how to budget themselves month-to-month. The proposed monthly budget only reveals that McDonalds is out-of-touch with its low-wage employees daily struggles. And McDonalds is certainly not alone in this regard.

For starters, the monthly expenses that McDonalds lays out exceeds the amount of money that one would make consistently working 40 hour weeks. Yes, you read that correctly: before one could even consider the prospect of having spending money, for things such as food, clothes, and items for young children that many of its 20-something year-old employees are trying to provide for, there is not even enough income to pay for monthly expenses. And McDonalds estimation of how much it costs to pay for one's average monthly expenses is grossly underestimated as well. Some highlights include an $150 car payment, a $600 mortgage, and a whopping $20 for health insurance. To point out that these all fall well below the national averages is hardly necessary; to expect a 25-year old young man with a family of 4 to spend $5 / month on each family member's health insurance is just insulting.

The raw total numbers, according to McDonalds, are that low-income employees will make $1,105.00 / month and have monthly expenses that total to $1,260.00. As has been noted, that estimated total expenses number is lower than what it really is--but for argument's sake we'll be generous to McDonalds and round that number up to $1,500.00. Regardless of how far off the mark McDonalds is, what is indisputable is that an employee is never going to make enough money in a 40 hour week. Unless they get a second job.

And McDonalds assumes you will be working a second job. In fact, they expect you to work 72 hours a week--essentially working two full-time jobs. Their model suggests that you will make $2,060.00 / month. Forget about spending time with friends, watching your kid's ballgame, or doing anything other than working and sleeping. I wonder if working that much would make you slighlty irritable--maybe jeopardize the sustainability of your relationships too.

Having to work 72 hours a week is not the American Dream--nor is it healthy. For a company that you put in 40 hours a week for to have the audacity to assume that you are working a second job just to get by, even when its own estimates on bills disregards reality, is not the American Dream. Now the purpose of this piece is not to solely demonize corporations such as McDonalds and countless others who legally follow national minimum wage regulations, but rather to simply acknowledge that our national minimum wage is too low.

Companies have no obligation to pay more than what minimum wage law requires, and frankly they have no reason to either. As long as unemployment remains relatively high, people are going to seek any jobs they can find. And as long as unskilled workers continue to vie for low-wage positions at a high rate, at the expense of unemployed skilled workers who will either not swallow their pride or realize that it is impossible to live practically on minimum wage, it would be illogical for companies to institute a higher minimum wage than law requires. Companies can continue to hire immigrants and high school and college kids in a revolving door-like manner until these people, usually after 3-5 years, realize it's unaffordable. And for those who lack the means to get out, well McDonalds bluntly says that you're going to need to work your life away here and at another place in order to scrape by.

Ethically it doesn't seem right, and it does not benefit the country either. When a person works 40 hours and still can't pay the bills they deserve help, and the taxpayer pays for it. When these same workers try to retire and realize they have no savings to do so, the taxpayer pays more in social security to allow them to at least try and finish their lives relatively stress-free. In order to potentially have a stress-free future after the age of 65 (and that number will continue to climb), everyone below that age takes on more stress now by paying more and more into the system.

The cynic will say that these low-wage jobs are not intended to be one's main source of income at the age of 30, 40, 50, but merely somewhere to get your foot in the door and develop skills while at school or still living under your parents roof. Alas, once you develop skills you go somewhere else to progress professionally and financially. This sounds ideal, as a 19-year old I intend to follow such logic, but for various reasons this is not the way it plays out for many of the nation's hardest workers. Companies that pay more have little incentive to hire more, so a person cannot make the jump from a McDonalds or a WalMart or a Market Basket to somewhere better because those places aren't hiring while the place they're already at is hiring and will easily replace them with cheap labor.

How do you fix the problem? No one is suddenly asking the United States to enact a national minimum wage that rivals Australia's rate of $15.59 (if that doesn't give you an excuse to migrate Down Under than I don't know what would), but what is being desired is for 40 hours a week to provide sustainability. Otherwise, there's absolutely no reason why people at the bottom should work, and many do realize the futility of working at minimum wage and decide to live off solely handouts instead. By creating a system in which there is even a debate regarding whether it is better to work at minimum wage or mooch off the system is disheartening--not to mention extremely costly for Americans to support monetarily.

So what's the number? $9.00 / hr? $10? $12? Using the $1500 / month expenses number (obviously on the low end of the national average) divided by 160 hours, that puts us at $9.375. That would be the bare minimum, it should probably be at least $10 or $11. For as long as immigration isn't capped and companies continue to disregard the concerns of its low-wage workers, people are going to cling to their $8.25 / hr job of flipping burgers. And they're going to continue to struggle. The numbers don't add up--even in McDonalds fantasy world.